Chad’s Creative Concepts designs and manufactures wood furniture. Founded by Cha
ID: 408720 • Letter: C
Question
Chad’s Creative Concepts designs and manufactures wood furniture. Founded by Chad Thomas on the banks of Lake Erie in Sandusky, Ohio, the company began by producing custom-made wooden furniture for vacation cabins located along the cost of Lake Erie and on nearby Kelly’s Island and Bass Island. Being an ‘outdoors’ type himself, Chad Thomas originally wanted to bring ‘a bit of the outdoors’ inside. Chad’s Creative Concepts developed a solid reputation for creative designs and high-quality workmanship. Sales eventually encompassed the entire Great Lakes region. Along with growth came additional opportunities.
Traditionally, the company focused entirely on custom made furniture, with the customer specifying the kind of wood from which the piece would be made. As the company’s reputation grew and sales increased, the sales force began selling some of the more popular pieces to retail furniture outlets. This move into retail outlets led Chad’s Creative Concepts into the production of a more standard line of furniture. Buyers of this line were much more price sensitive and imposed more stringent delivery dominate sales, accounting for 60 percent of volume and 75 percent of dollar sales. Currently, the company operates a single manufacturing process in Sandusky, where both custom furniture and standard furniture are manufactured. The equipment is mainly general purpose in nature to provide the flexibility needed for producing custom pieces of furniture. The layout puts together saws in one section of the facility, lathes in another, and so on. The quality of the finished product reflects the quality of the wood chosen and the craftsmanship of individual workers. Both custom and standard furniture compete for processing time on the same equipment by the same craftspeople.
As he reviews the progress of Chad’s Creative Concepts, Chad Thomas is pleased to note that the company has grown. Sales of custom furniture remain strong, and sales of standard pieces are steadily increasing. However, finance and accounting indicate that profits are not what they should be. Costs associated with the standard line are rising. Dollars are being tied up in inventory, both of raw materials and work in progress. Expensive public warehouse space has to be rented to accommodate the inventory volume. Thomas also is concerned with increased lead times for both custom and standard orders which are causing longer promised delivery times. Capacity is being pushed, and no space if left in the plant for expansion. Thomas begins a careful assessment of the overall impact that the new standard line is having on his manufacturing process.
QUESTION:
1. What are the reasons (both strategic and tactical) behind the company's problems? (1 paragraph)
Explanation / Answer
The reasons (both strategic and tactical) behind the company's problems.
2. Related with Process and Capacity Design- The Company was using same production line and same craftsmen for both the business. Both custom and standard furniture take same processing time on the same equipment and by same craftspeople, which is causing delay promised delivery time and in increased in lead times for both custom and standard orders and capacity is pushed, due to lack of space for expansion.
3. Delay in Production Process- The layout design for both the product was same, the products were being manufactured at same place resulting in delay in production process and decreased capacity of business.
4. Lack of Sufficient Human Resources and Job Design- In the given case company was facing problem of late delivery of product and product in status of work in progress in their warehouse, this was due to lack of sufficient workforce. As the limited workforce was indulge manufacturing both product lines.
5. Supply Chain Management- Company was facing problem of delay delivery and increase lead time, this was due in appropriate supply chain they were using.
6. Rise in cost – Company was going through the problem of rising cost related with standard line because of inactive and increased inventory cost in form of raw material and work in progress, due to lack of sufficient craftsmen. There was Increased cost of rented ware house as they were renting warehouse at high price
7. Scheduling- Company was not able to match the Sale of standard as they were lacking regular scheduling. The company needs to make scheduling decision to ensure that there are fewer raw materials in status of work in progress.